Treasury's Titillation over TARP and budget increase

The Treasury department spends an awful lot of PR time extolling the success of the TARP program (and never mentioning any of the other myriad of bank subsidies and guarantees provided outside the realm of Congressional approval that rendered the $700 billion program a small percentage of the financial aid package to Wall Street or a peep about the $4.1 trillion of debt it issued since the fall of 2008, $ 1 trillion of which rotated through banks and into historically high excess reserves at the Fed).

Good for them.  Today, Geithner spewed another projectile of self-pride over the $24 billion profit we taxpayers are gonna reap from his stellar investment in reckless banks and risky assets. This silenced the critics, as one commentary pointed out. Sure, cutting us a check wasn't the point - I mean, if it was successful betting he was going for, the $700 billion of TARP money put into say, silver , would have bagged us $2.1 trillion.  

But, TARP only appears to have worked if you ignore the shell-game that surrounded it. Without the amount of collective federal support, including the lavishing of guarantees, toxic asset purchases that remain on federal books, the abolition of accounting requirements that would force banks to reveal the real risk in their existing loan portfolios, the cheapening of money to historically low levels by the Fed's QEX efforts, and the very notion that the Treasury department was the banks' financial cushion,  banks would have not been able to repay the isolated TARP handouts with interest. They wouldn't have had the money from other avenues to use. It's meaningless to consider this a savior type of economic strategy. Aside from which, the CBO tallied the budget cost of TARP at $25 billion, so at best, the shell-game paused at a wash.

On a separate note, if TARP was so successful, why is Geithner requesting a 14.2% budget increase for the Office of Inspector General. It may be small potatoes after his $24 billion windfall to quibble over a $5 million dollar hike, but  given the noise about the program winding down in this time of budget banter in Washington, and unless the next SIGTARP stepping into Neil Barofsky's shoes is getting a $5 million raise,it seems excessive. Just saying.

Congrats to Live my Life/TARP video - another win!

In the wake of this week's Fed dumping of more details behind its bailout and subsidization of the global banking community program, we got reminded that TARP was a tiny fraction of the aid inhaled by the banks that screwed us all to begin with. Indeed, as we knew and now see in more detail, the Fed was, and remains, the biggest bailout and least accountable (when it matters) engineer. The data dump re-underscores the unprecedented largesse granted to the US banking system in its hours of need, as opposed to the US general population. Another reason why we'd be better off without Bernanke.

But, there's some good news. My friends, Michael Cornell, Tracey Paleo and the rest of the talented, enthusiastic and dedicated team behind the Live My Live Video - just won ANOTHER award! - this time FIRST place in the music video category of the California Film Awards. Check out the video, if you haven't already.

TARP Votes Biting Back into Mid-terms?

Today’s NBC Article Bailout’s Hangover Just Won’t Go Away, was one of a growing pile of pieces on how the Democrats aren’t handling their position on TARP and Wall Street very well, compared to the Republicans, some of whom are making a big deal over it in their mid-term campaigns. I find it equally bizarre that:

a) The Democrats don’t have a general retort to the GOP and Tea Partiers painting them as the morons who gave Wall Street a platinum-coated bail-out, and

b) Certain Republicans are acting like their party took such a clear stand against TARP.

Both parties helped Wall Street back on its feet, under a Republican president, in October 2008, just as both joined hands to repeal Glass-Steagall in 1999 under a Democrat. (With notable individual exceptions.)

First, I must once again, point out that TARP was only a small portion of the multi-trillion dollar bailout and subsidization of Wall Street (for more details on why, read It Takes a Pillage, or check out my bailout tallies). But that aside, since TARP was the only Congressionally approved component of the massive financial bank stimulus package, I thought I’d take another look at how its vote went down.

TARP, aka ‘The Bailout” according to most of the media, because it’s just too complicated to talk about all the other assistance given to the banking system in one sound-bite, was the cornerstone of the Emergency Economic Stabilization Act of 2008. The EESA was the pile of verbiage that had to be adopted by Congress in order to make it seem like this was more than a reckless giveaway to stabilize the most powerful banks, and not the American economy (or at least not as measured by defaults, foreclosures, bankruptcies or job losses).

Yes, we heard from Tim Geithner, Ben Bernanke, Hank Paulson and Andrew Ross Sorkin – that things would have been so much worse without it - the Great Depression on Steroids. Yeah, helping stupid banks that created and leveraged assets they couldn’t sell was a much better strategy than helping all those stupid people who bought homes they couldn’t afford – hell, if the latter was done, who would be reaping all the bonus money? Still, it’s astonishing that the Democrats are losing ground in the polls on this issue, when both parties screwed up with respect to playing hardball with the banks that screwed the rest of the country.

Leading up to the 2008 election, 74 Senators: 39 Democrats, 34 Republicans and 1 Independent (Joe Lieberman) approved the EESA that validated TARP; (notably this included Democrats Christopher Dodd, who later co-authored the benign financial “reform” bill, Barack Obama who was prepping Geithner to be his Treasury Secretary a month later,  both New York Senators, Hilary Clinton and Chuck Schumer, Harry Reid, and Joe Biden. The GOP rosters included John McCain (R-AZ). So, from a technical, mathematical standpoint – 80% of the Democrats approved the Act that spawned TARP (and enabled the Fed to pay the banks interest on the monies they then hoarded with the Fed instead of lending or using them for customer debt restructurings afterwards – a figure that rose to approximately  $1 trillion today in excess reserves from nearly nothing before the Act passed).  But, 70% of the Republicans also voted for the package.  That 10% difference in approvals is hardly earth-shattering, more than anything it shows the blind adherence to the notion that Wall Street must be bolstered to keep the entire universe from shattering apart.

A total of 25 Senators;  9 Democrats, 15 Republicans and 1 Independent (Senator Bernie Sanders) voted No. So of those against it, 60% were Republicans, and 40% were Democrats or Independent. Still, that’s only 30% of the Senate GOP and 20% of the Democrats. The Democrats should have been more opposed to TARP, or at the very least argued for TARP with MANY MANY strings, this is true. But, it’s not like the GOP was viscerally opposed as  a general stance either.

The Democrats who voted No on TARP up for reelection are:  Russ Feingold (D-WI) and Ron Wyden (D-OR).  The Republicans are: Richard Shelby (R-AL), Mike Crapo (R-ID)and Jim DeMint (R-SC).